Term Assurance explained

Term Assurance is life insurance in it’s cheapest form. The sum assured under the policy is only paid out if death occurs within a specified term.

If the life assured survives until the end of the term, the policy will expire and there will be no monies payable.

There are several types of Term Assurance. The following list is not exhaustive, but it covers the main types:

The amount payable on death remains unchanged throughout the term of the policy.

This is generally the cheapest form of life cover. The sum assured decreases each year that the life assured lives, usually on a fixed scale, until at the end of the term the amount is zero.

This type of cover is commonly used with repayment mortgages, so that in the event of death before the end of the mortgage, the capital balance outstanding can be repaid.

Similar to convertible term assurance, except that the option is to exchange the original term assurance for another term assurance, at the end of the term. Again the main benefit here is guaranteed insurability. Renewable and Convertible Term Assurance are sometimes combined in the same policy.

Term Assurance where the value of the Sum Assured is linked to increases in an index - usually the Retail Prices Index (RPI). The premium for this kind of policy will usually increase at a set amount.

Upon the death of the life assured within the term, this type of cover pays regular instalments of capital for the balance of the term of the policy. It is intended to provide an income for a family on the death of the breadwinner. It may be possible to commute the income payments for a lump sum instead.

The sum assured is still only payable on death within the specified term. The premium payable buys units and each month enough units are cancelled to pay for that month's life risk. If the units over-perform, then the value of the units left at the expiry date would be payable as cash to the policyholder. If the units under-perform then either the premiums may be increased or the sum assured reduced.

If you’re not sure what kind of policy you have you should check your policy documents or contact us to confirm.

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How to find funds

Universal funds:

  • Simply select ‘Universal Funds’ from the ‘Original Policy Provider’ dropdown below

For all other funds:

  • Look at your most recent annual statement and type in the name of one of your funds into the search box below. From this we’ll be able to show you funds that are only available to customers from your original policy provider and your policy type.

Please note that not all funds will be available for your particular policy. Remember if you look at the total charges for any of the funds, you may also have product charges too. If you want more about product charges or available funds you can call us on the normal number.

The majority of our prices are shown online in pence (GBX) apart from former Alico funds which are shown in pounds (GBP).

The value of the units is not guaranteed and can go down as well as up.

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Important information

The information made available on Morningstar’s tool is taken from a variety of sources and is for general information purposes only. The information has not been tailored to your particular circumstances and does not constitute a personal recommendation or financial advice.

If you need assistance in reviewing your investments, you should speak to a Financial Adviser. You can find a Financial Adviser in your area at unbiased.co.uk.

You should also read Morningstar’s general disclaimer here

Money paid into the policy is invested in a with-profits fund, together with the savings of other policyholders. Bonuses are then added to the policy, depending on how the investments in the with-profits fund perform. These bonds normally have a minimum final value (known as the sum assured) which is added to any bonuses due when money is taken.

There are three with-profits funds that ReAssure customers are invested in, the Guardian Assurance With-Profit Fund, the Windsor Life With-Profit fund and the National Mutual With-Profit fund and these can be invested in differently. If you’re not sure what kind of with-profits fund you’re invested in, you should look at your most recent annual statement or bonus notice.

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